Percentage change - WJECSimple appreciation and depreciation
Percentages can be used to increase or decrease a quantity relative to its size. Shops reduce their goods by a percentage and the government increases the cost of goods by adding on a percentage tax.
When undertaking calculations with simple appreciation and depreciation, the value remains fixed each year.
Example
Anita invests £300 in her savings account. Each year she earns 2.5% simple interest per annumEach year, annually, which is paid into a separate account. She leaves this money in her account for five years. How much interest does she earn in total and how much money does she now have in total?
Solution
1. Calculate one year’s interest:
£300 ÷ 100 × 2.5 = £7.50.
2. Multiply this by the number of years of investment:
£7.50 × 5 = £37.50.
Anita now has £337.50.
Question
Evan takes out a loan of £1,000 for three years. Simple interest is charged at 8% pa (per annum). How much will he have paid back at the end?
One year’s interest: £1,000 ÷ 100 × 8 = £80.
Three year’s interest: 3 × £80 = £240.
Total paid: £1,000 + £240 = £1,240.
Question
Phones For Phones release a new handset each year. As a result, previous models depreciate (decrease) in value by 20% of the original price. How much would a phone costing £200 be worth after three years?
1. Calculate 20% of the original value:
£200 ÷ 100 × 20 = £40.
2. Multiply this by the number of years:
£40 × 3 = £120.
3. Subtract this from the original value:
£200 − £120 = £80.
A phone costing £200 would be worth £80 after three years.
